Canadian home sales were up 3.6 per cent in May over April as one of the more unusual and unpredictable spring markets took hold across the country, but transactions were off 2.6 per cent year over year, according to May sales numbers released Monday by the Canadian Real Estate Association.

Prices were up 3.7 per cent year over year with the average Canadian house price at $388,910 in May, up from $375,062 a year earlier.

The month over month increase in home sales was the biggest gain seen in more than two years, according to CREA.

“The increase lifted national activity almost to where it had been just before new mortgage rules came into force last summer, marking the first noteworthy increase in the past nine months,” the national housing association said in a statement Monday.

Virtually every major urban centre, including Toronto where prices hit a record $542,174 in May, up 5.4 per cent from May of 2012, saw an improvement in home sales, says CREA. May and June are typically the biggest months for home sales.

The number of homes listed for sale was up almost 2 per cent.

“The pop in Canada’s resale housing numbers adds one more to a series of upbeat economic indicators that exceeded expectations in recent weeks,” said CREA economist Gregory Klump.

He cautioned that “it’s important not to put too much stock in one month’s worth of data, but taken together with other recently published economic gauges, Canadian resale housing market results provide further evidence of the widely anticipated firming trend for (the) Canadian economy.”

Other economists, however, remain far more concerned – and deeply split – on what the future holds, be it the “fabled soft landing” predicted recently by BMO chief economist Douglas Porter or a major correction in prices and sales, especially in Toronto’s condo sector, that could last for years.

ScotiaBank economics warned in a note Monday morning that what’s more worrisome now isn’t so much the resale transaction numbers, but “that the correction has now migrated into the new home sales market.”

It points out that new home sales were down 38 per cent in April year over year, some 43 per cent of the decline in single-family low-rise homes and 33 per cent in new high-rise homes where developers have been putting the brakes on new condo projects.

“This matters much more than the resale correction that began over a year ago because of the value added in construction of new home sales as opposed to resales that are mostly just paper swaps with a few added services to facilitate the transaction,” says the note from ScotiaBank.

While housing starts were up in May, they have been slumping for months and aren’t likely to turn around anytime soon, which could cost some 150,000 construction and housing related jobs across the country, about 35,000 of them in the GTA alone, according to a recent report by veteran housing economist Will Dunning, who analyses the market on behalf of the Canadian Association of Accredited Mortgage Professionals.

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